Hedge Funds

SEC inspections will likely focus on documentation


As the U.S. Securities and Exchange Commission begins the process of inspecting the hundreds of recently registered hedge funds, staff examiners will likely focus not on trading strategies, but on documentation.

That is the view of Steven Lofchie, a partner at Davis, Polk & Wardwell who has participated in training seminars for the agency's examinations staff. Speaking earlier this week at the Managed Funds Association conference in Key Biscayne, Fla., Lofchie noted that the SEC staff, while well intentioned, is not necessarily well versed in the nitty-gritty details of most hedge fund strategies.

"The SEC staff is not